Patent lawsuits flood East Texas courts in November

Businesses and individuals filed a record 851 patent infringement lawsuits in November - more than half of them in the federal courts of East Texas - just before new judicial rules took effect that may make it more difficult for their cases to succeed.

Lawyers filed 467 new patent cases last month in the U.S. District Court of the Eastern District of Texas. That represents 32 percent more infringement lawsuits than ever filed in a single month in any federal judicial district in U.S. history, according to legal-research provider Lex Machina.

The biggest wave of new intellectual property disputes came from Nov. 23 to Nov. 30. Plaintiffs filed 341 suits in East Texas then, making it the busiest seven days of filing new patent lawsuits in any court jurisdiction ever, Lex Machina data shows.

The litigation blitz, which solidifies the Tyler-based Eastern District of Texas as the patent litigation capital of America, was sparked by a change to the Federal Rules of Civil Procedure approved by the U.S. Supreme Court that requires plaintiffs to provide more extensive details in their initial complaints regarding alleged wrongdoing by the defendants. The rule change affects a variety of intellectual property cases.

Patent owners rushed to file new cases before the new rule took effect Dec. 1 because they worry that trial judges' interpretation of the requirement would cause more cases to be thrown out early in the process, legal experts said.

"The rush of filings was simply lawyers not really knowing what the impact of these rule changes will be and trying to be safe rather than sorry later," said Eric Chenoweth, a partner who specializes in patent litigation at Yetter Coleman in Houston.

"There are a lot of uncertainties about how this rule change will be viewed and implemented by the federal judges," Chenoweth said. "We have no idea whether the rule will be applied retroactively to cases already pending."

The Eastern District of Texas, which spans 43 counties, became a hotbed for patent infringement filings a decade ago when its federal judges set up a so-called rocket docket that pushed a variety of cases to trial faster. That benefits plaintiffs because it requires defendants to settle lawsuits more quickly or face the expensive process of discovery required for trial, experts say.

The 467 new patent cases in November in East Texas bests the previous record of 354 lawsuits filed in the Eastern District this past June, which in turn exceeded the prior record of 333 from May, according to Lex Machina. Fifty-five percent of such lawsuits filed nationwide in November went to the Eastern District.

A group of 22 high-volume plaintiffs - patent owners who bring 10 or more infringement suits - were the primary reason for the record. About 37 percent of the United States' new infringement suits in November were lodged in the Eastern District by one of these frequent-filers.

Although the U.S. Supreme Court approved the change to the federal rules in April, the Eastern District did not see the rush start until Nov. 23, eight calendar days before the change took effect.

Patent trolls

John Low, a partner who specializes in patent litigation at McDermott Will & Emery in Houston, said the new rule mostly affects high-volume plaintiffs, who buy patents from businesses and individuals and then file cookie-cutter infringement suits against companies they allege are using patented techniques without a license. Critics of those suits refer to such plaintiffs as patent trolls.

In 2011, Congress tried to rein in patent trolls when it passed the America Invents Act, which required patent owners to sue alleged infringers individually instead of naming dozens of companies in one generic lawsuit. But trial lawyers quickly figured out ways around the law and the number of patent lawsuits actually jumped the year after the law was implemented.

Later efforts by Congress to pass tort reform related to patent litigation have been thwarted because many of the largest technology companies, including AT&T, Google, BlackBerry and Microsoft, are themselves major patent holders and oppose any measures that would limit their abilities to enforce patents in court.

"The new rules place higher standards on plaintiffs suing multiple parties because it requires them to be more fact specific in their allegations," Low said. "The biggest impact will be on plaintiffs who are suing with the objective of obtaining a quick settlement from defendants who want to avoid the expensive costs of prolonged litigation."

Prior to Dec. 1, civil procedure rules mandated only that infringement complaints specify a defendant had supposedly violated a patent, along with providing a general description of the products that supposedly violated it, and the U.S. Patent and Trademark Office number identifying the patent.

Hence the rush

"Accused infringers were often required to conduct discovery just to learn what they had been accused of" under the previous rules, said Jason Wietjes, shareholder at the Polsinelli law firm in Dallas. "That is an advantageous position to be in for some plaintiffs. Hence the filing rush."

The problem for patent plaintiffs now is figuring out precisely what the new rules require them to allege in their complaints and whether the new rules apply retroactively to certain cases filed before Dec. 1, Wietjes said. As a result, he said, more business defendants will likely ask judges to throw out patent lawsuits, arguing that the plaintiffs' complaints have failed to state a legal claim for which a court can provide some sort of relief.

But Doug Kubehl, a partner who practices intellectual property law at Houston-based Baker Botts, said he's not sure how successful such challenges will be because the judges in the Eastern District have been reluctant to dismiss cases quickly just because the lawsuits lack specificity. "It will be up to the individual jurisdictions to shape their own standards on pleadings," Kubehl said.

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